FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

BEFORE THE FEDERAL ELECTION COMMISSION 

In the Matter of ) 

) MURs 6391 and 6471 

The Commission on Hope, Growth, and ) 

Opportunity ) 

) 

STATEMENT OF REASONS OF 

VICE CHAIRMAN MATTHEW S. PETERSEN AND 

COMMISSIONERS CAROLINE C. HUNTER AND LEE E. GOODMAN 

This matter began in October 2010 when the Commission received the first of two 

complaints alleging that the Commission on Hope, Growth, and Opportunity ("CHGO") had 

violated the Federal Election Campaign Act of 1971, as amended ("the Act"), by (1) failing to 

report and include proper disclaimers on its communications and (2) failing to organize, register, 

and report as a political committee. This matter encountered procedural and evidentiary 

difficulties from the outset. 

The Office of General Counsel ("OGC") spent over three years analyzing the case before 

submitting its final First General Counsel's Report. In 2014, the Commission voted 

unanimously to find reason to believe CHGO violated the Act's disclosure requirements by 

failing to report its communications, and we authorized an investigation. OGC spent nearly one 

year on an investigation that failed to build a sufficiently detailed record of CHGO's activities. 

At this point, we advocated authorizing pre-probable cause conciliation of the obvious disclosure 

violations—while time still remained under the five-year statute of limitations. Our colleagues 

refused, preferring instead to pursue a broader political committee theory for two additional 

months. During that time, it became apparent that CHGO was a defunct organization that had no 

money, and apparently no officers or directors to bind it in a legal agreement. Indeed, OGC 

acknowledged that any further use of the Commission's enforcement process against CHGO ; 

would be pyrrhic. Therefore, with the statue of limitations effectively expired, we concluded 

that this case did not warrant the further use of Commission resources. We therefore voted to 

close the file, which admittedly brings this matter to a frustrating conclusion. i 

***** i 

Formed in March 2010, CHGO was an unincorporated non-profit social welfare group 

organized under section 501 (c)(4) of the Internal Revenue Code.' Its stated purpose was "to 

Resp. at 2. 
educate the public on matters of economic policy formulation,"^ focusing on "macro-economic 

issues." ^ CHGO described itself "as an economic 'think tank'" on tax, trade, budget, and 

economic growth policies, * and it apparently furthered these efforts primarily by broadcasting 

communications across the country. 

As noted above, this case began when the Democratic Congressional Campaign 

Committee ("DCCC"), and thereafter Citizens for Responsibility and Ethics in Washington 

("CREW"), filed complaints alleging that CHGO's communications did not contain the 

appropriate disclaimers and that CHGO had not properly reported these communications to the 

Commission in violation of the Act.^ CREW separately alleged that CHGO had failed to 

organize, register, and report as a political committee.^ 

While it existed and participated in the initial stages of this case, CHGO argued that its 

ads were "specifically issue oriented," did "not advocate the election or defeat of any identified 

federal candidate," and therefore were not reportable independent expenditures.' Additionally, 

CHGO contended that its communications were not "'targeted' at any specific electoral 

constituency," a required element of an electioneering communication. CHGO further asserted 

that the disclaimers it did include on its communications were not objected to by its broadcasters 

and sufficiently alerted the public to the identity of the communications' sponsor.' CHGO 

maintained that its sole purpose was to educate the public on matters of economic policy 

formulation, and that it was not a political committee. 

After a series of false starts,'® the Commission received OGC's (final) First General 

Counsel's Report in this matter in December 2013, over three years after the case was initiated. 

3 

Supp. Resp. at 5. 

Resp. at 2. 

Id. 

' See Compl., MUR 6391 (Oct. 7,2010). Specifically, the DCCC alleged that CHGO (i) failed to report its 

ads pursuant to 11 C.F.R. §§ 109.10 or 104.20, and (ii) failed to include proper disclaimers pursuant to 11 C.F.R. 

§ 110.11. CREW alleged that CHGO spent more than $2.3 million to broadcast fifteen advertisements and failed to 

include appropriate disclaimers on those advertisements or report the advertisements to the Commission. See 

Compl. at 3, MUR 6471 (May 23,2011), Amend. (Apr. 26,2012). 

® See Compl., Amend., MUR 6471 (Apr. 26, 2012). 

^ CHGO Resp. at 3, MUR 6391. 

' Id. To the extent it had made a good faith error in not filing electioneering communication reports, CHGO 

claimed that the underlying policy considerations of the electioneering communications reporting requirements were 

served by a combination of the disclaimer contained in each of its communications and the publicly available daily 

logs of broadcasters required by the FCC. Id. at 3-S. 

' Id. at 4. 

On August 31,2011, OGC circulated its initial First General Counsel's Report ("FGCR") to the 

Commission, with the Commission's first votes due on September 7, 2011. The Commission quickly calendared 

and discussed this report at an executive session four years ago, on September 27, 2011. Within two days of that 
OGC recommended that the Commission find reason to believe that CHGO had failed to (1) 

properly report its communications, (2) properly include disclaimers on those communications, 

and (3) organize, register, and report as a political committee.As detailed in the report, the 

available information was sufficient to support a finding of reason to believe that CHGO had 

failed to report its communications as required by the Act. The Commission voted unanimously 

to that effect, authorizing OGC to conduct an investigation into CHGO's apparent reporting 

failures.'^ 

In our view, however, the information available at the time did not support a finding of 

reason to believe that CHGO had failed to organize, register, and report as a political coimnittee. 

In particular, it was not at all clear fi-om the incomplete spending breakdown available to the 

Commission that CHGO had made sufficient expenditures to qualify as a political committee.'^ 

It was, however, our expectation that OGC's investigation would provide a more thorough 

accounting of CHGO's spending, including its spending on each conununication, and whether 

there were other communications not known to the Commission that CHGO had financed. On 

the basis of that information, we anticipated being able to make a finding regarding CHGO's 

political committee status. 

Ten months after the Commission authorized its investigation, and less than three months 

before the statute of limitations would expire for the alleged reporting violations, OGC sent the 

Commission its investigative report. However, the investigation had not developed any more 

executive session, however. OGC withdrew its Report to reconsider its analysis. See OGC Mem. to Comm. (Sept. 

29,2011) 

i reconsideration lasted for over two years, during which time CHGO ceased to exist. 

11 

12 

First General Counsel's Rpt. at 40, MUR 6391/6471 (Dec. 27, 2013). 

Amended Certification, MURs 6391/6471 (Sept. 24,2014). 

" In its First General Counsel's Report, OGC concluded - and our colleagues agreed - that the available 

(albeit incomplete) information regarding CHGO's spending in 2010 demonstrated that it had likely qualified as a 

political committee. First General Counsel's Rpt. at 38, MUR 6391/6471 (Dec. 27,2013). This conclusion rested 

on die belief that of die S2.2 million in spending alleged in the complaint, S1.7 million was for what OGC 

determined were eiqiress advocacy communications, while the rest was spent for cormnunications that in OGC's 

view siqiported or opposed clearly identified candidates. Id. Equally critical to this conclusion was OGC's belief 

that the remainder of CHGO's spending fiom 2010 (reported in IRS filings to have been $4,770,000, of which 

$4,594,823 was devoted to media placement and production alone) was likely similarly apportioned. We have on 

several occasions set forth our views on the proper analysis for determining political cormnittee status. See, e.g.. 

Statement of Reasons of Chairman Lee E. Goodman and Commissioners Caroline C. Hunter and Matdiew S. 

Petersen, MUR 6538 (Americans for Job Security): Statement of Reasons of Chairman Lee E. Goodman and 

Conunissioners Caroline C. Hunter and Matthew S. Petersen, MUR 6589 (American Action Network). In light of 

those views, we believe OGC's - and, by extension, our colleagues' - conclusion was flawed in two critical ways. 

First, we did not agree with die eiqiress advocacy analysis included in OGC's report and, therefore, the conclusion 

that $ 1.7M of the spending alleged in the couqilaint qualified as eiqienditures. Second, we were not prepared to 

extrapolate die bre^down of CHGO's total spending ($4.7 million) based on the $2.2 million subset of spending 

alleged in the complaint. We nevertheless signed on to a Factual and Legal Analysis that placed the Respondent on 

notice tliat the Conunission was considering whether CHGO's activities qualified it as a political conunittee. 

Factual and Legal Analysis at 8-9, MURs 6391/5471 (Sept. 30,2014). 
information detailing CHGO's spending on specific communications. In light of this and the 

impending expiration of the five-year statute of limitations, we proposed that the Commission 

proceed to pre-probable cause conciliation on the reporting violations, with one of the largest 

opening civil penalties in recent years. 

Meanwhile, our colleagues were intent on pursuing a political committee finding despite 

the imminent expiration of the statute of limitations on the reporting violations. As the statute of 

limitations dwindled, our colleagues on two occasions delayed action on the matter to afford 

OGC time to resume its investigation to develop further details on the broader political 

committee theory. 

In the weeks that followed, OGC pursued new investigative leads. For our part, the 

1 information learned during this period did not definitively resolve whether there was reason to 

2 believe CHGO was a political committee and raised novel legal issues that the Commission had 

2 no briefing or time to decide.What did crystallize was that the case had become an academic 

A exercise. The obvious violations became time barred in October. The organization no longer 

5 existed, having filed termination papers with the IRS in 2011. It had no money. Its counsel had 

resigned. There were no people acting on its behalf, and we learned that there did not appear to 

be any agents of CHGO with whom the Commission could conciliate or who could otherwise 

legally bind the defunct organization. Indeed, we were informed that any further enforcement 

action in this matter was a pyrrhic exercise. 

At that point, knowing that CHGO no longer existed and that the statute of limitations 

effectively foreclosed further enforcement efforts in any event, we concluded that any 

conciliation effort would be futile, and the most prudent course was to close the file consistent 

with the Commission's exercise of its discretion in similar matters." 

See Second General Counsel's Rpt. at 10, MUR 6391/6471 (July 28,2015) (OGC was "not able to 

definitively itemize CHGO's spending on independent expenditures versus electioneering communications"). 

Frustrated with the investigative results (or lack thereof), we explained during executive session other 

investigative steps that might have been helpful in uncovering more detailed information on the amounts spent by 

CHGO on each communication. Our colleagues apparently interpreted that as a "strong suggestion" or "direction" 

for OGC to continue its investigation. Not so. Instead, we advocated attempting an immediate conciliation before 

the five-year statute of limitations was to expire in October. But the matter was held by a Commissioner. 

For example, the investigation revealed that a large portion of CHGO's disbursements were for vendor 

commissions and other general payments to officers or directors or vendors, raising previously unconsidered 

questions of how to analyze such disbursements for purposes of political-committee-status-analysis. Nor were we 

persuaded by OGC's calculations that 61% of CHGO's spending was devoted to communications that expressly 

advocated the election or defeat of a federal candidate. See Third General Counsel's Rpt. at 19, MUR 6391/6471 

(Sept. 24,2015). In any event, the issues had become academic because conciliation was impossible. The purpose 

of enforcement is to correct or remedy violations of law, not to make policy statements. 

" See Heckler v. Chaney, 470 U.S. 821, 832 (1985) ("[A]n agency's decision not to prosecute or enforce ... 

is a decision generally committed to an agency's absolute discretion ... [and] often involves a complicated 

balancing of a number of factors which are peculiarly within its expertise. Thus, the agency must not only assess 

whether a violation has occurred, but whether agency resources are best spent on this violation or another, whether 

the agency is likely to succeed if it acts ..."); see also MUR 6638 (Todd Long) (reasons for dismissal included that 

the committee was terminated); MUR 6236 (MN-06 Congressional Victory Committee) (no further action taken 

against registered but defunct committee that had no staff); MUR 5358 (Morgan for Congress) (file closed without a 
MATTHEW STPETERSEN 

Vice Chairman 

CAROLINE C. 

Commissioner 

///L^//5 

Date 

yiair. (e 

Date 

finding as to a committee because it had terminated); MUR 5218 (Russ Francis) (no further action on knowing and 

willful personal use violations because individual's exact whereabouts were unknown and he would not likely be 

able to pay any civil penalty); Statement of Reasons of Commissioners Weintraub, McDonald, Thomas, and Toner, 

MUR 5089 (Matta Tuchman for Congress, et al.) (four years and two months after respondents fraudulently 

misrepresented themselves as writing on behalf of a party committee, "amongst the most egregious transgressions of 

our Act," the Commission exercised its prosecutorial discretion to dismiss the matter and close the file due, in part, 

to "the age of the case" and "the fact Respondents apparently are no longer active in federal politics."). This 

matter—involving a defunct, terminated, unincorporated, unregistered, and unauthorized organization—is not 

analogous to those matters in which we exercised our discretion to pursue dormant but registered candidate 

committees. Those organizations were not terminated and negotiation was possible by working with the former 

candidate who authorized them and who served as an agent of the committee for certain purposes according to the 

Act and the Commission's regulations. See 52 U.S.C. § 30102(e)(2); 11 C.F.R. §§ 101.2(a), 102.7(d).